Korea May base oils output rangebound

South Korea’s base oils output held in a narrow range in May even as total refinery output rose.

Base oils production of 2.86mn bl (402,820t) in May edged up from 2.81mn bl the previous month and by 25pc from year-earlier levels, according to Korea Petroleum Association (KPA).

Output has held in a 2.79mn-2.89mn bl range since last December. It had held above the 3mn bl level during the previous six months to November.

The lower output this year has coincided with weak base oils prices relative to crude and diesel.

Unusually high diesel prices relative to crude have also incentivized refiners to boost output of the motor fuel.

China’s base oils demand has also been lower than expected. The trend has slashed its requirements for base oils from South Korea.

South Korea’s higher base oils output during second-half 2021 followed a surge in global base oils prices and margins and unusually tight supply during the first half of last year.

Base oils output edged up in May from the previous month when some scheduled plant maintenance work began. The work ended in second-half May.

South Korea’s base oils exports similarly rose in May from the previous month. They then slumped in June.

The 1.7pc rise in base oils output from April lagged the 5.4pc rise in total refinery production.

The trend cut base oils’ share of refinery output to 2.9pc of the total. The share was down from 3.0pc in April and the lowest in four months.